UK Edition
To increase its income in line with inflation was one of our Income Portfolio’s goals when we began it in late 2016. Little did we know that we would face a CPI figure nearing double digits a few years later. Overall we fear that the portfolio will struggle to meet our target but one holding at least has come out all guns blazing.
“The board intends to increase the first three quarterly interim dividends in 2022 from 7p per share to 7.5p per share,” JP Morgan Claverhouse said in its annual results, published on Monday. This would be a rise of 7.1pc.
While it did not commit to a figure for the fourth payment of the year it said it aimed to meet its dividend policy, which is “to seek to increase the total dividend each year and, taking a run of years together, to increase dividends at a rate close to or above the rate of inflation”.
This is a goal it has comfortably met over the past decade: while CPI inflation has averaged 1.8pc over that period, Claverhouse’s divi has grown by 5.2pc a year (growth in dividends across the London market averaged 1.4pc a year, the trust said).
Two things give us hope that Claverhouse can indeed maintain this impressive record. First, the divi it has just announced for the year to December, 30.5p, a rise of 3.4pc, was more than covered by its own 30.8p per share dividend income from its holdings. This shows the strength of the recovery in divis, which were badly hit by the virus; 2020’s earnings per share were only 23.2p.
Second, despite the fact the trust had to dip into its reserves to make up the difference between its income and its dividend payouts in 2020, those reserves are still strong; they stand at £21.6m. This compares with the £18m cost of 2021’s dividend payments, so the trust has more than a full year of payments in hand even if it does raise the 2022 payment by 7pc or so.
The trust had a good year in capital terms too. Its total return, on the basis of net asset value rather than share price, was 21.5pc. The FTSE All-Share index gained 18.3pc on the same basis.
Away from the facts and figures, readers may be reassured to read the words of the trust’s chairman, Andrew Sutch, who will retire at the annual meeting next month.
“Some years ago Claverhouse was one of the first investment trusts I invested in, paying a modest amount each month into the savings scheme then provided by the manager,” he wrote.
“While each investor must decide their own investment criteria and considerations, I believe that my long-term investment in the company has been good, in that it has outperformed the benchmark over the relevant period and has benefited from the ‘get rich slow’ attribute that has sometimes been given to the company’s investment strategy.
“The increases in dividends paid by the company over 49 years have also been of attraction to those investors seeking regular and growing income. As someone who intends to remain a shareholder for the foreseeable future, I wish the company’s fortunes well.”
Questor had the good fortune to invest more in Claverhouse than in most of our Income Portfolio holdings. Typically we put £20,000 into each, out of a notional £500,000 invested at the outset, but we invested £41,938 – the proceeds of the sale of an earlier holding, Invesco Income Growth – in this trust. Our holding in Claverhouse has now risen in value to £53,833.
This trust is more than living up to our hopes. Hold.
Questor says: hold
Ticker: JCH
Share price at close: 706p
Update: Regional Reit
Last month this regional office fund confirmed earlier plans to pay a fourth quarterly dividend for 2021 of 1.7p, which will bring the total for the year to 6.5p. It didn’t say anything about the dividend for the current year, although this column certainly expects an increase. We’ll hear about the first quarterly divi for 2022 on May 25.
Regional said it had collected 98.6pc of rents due in 2021 if we include monthly rents and agreed rental collection plans. It said it remained “in supportive and ongoing discussions with occupiers regarding the balance of the outstanding rent and expects to collect the vast majority in due course”.
That final dividend for 2021 will be paid on April 8. Another trust to hold on to.
Questor says: hold
Ticker: RGL
Share price at close: 88.4p
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